March 07, 2011

Illinois Senate president wants to look at taxing retirement income

Illinois Senate President John Cullerton today suggested the state should start taxing the retirement income of senior citizens who are able to afford it.

The state does not currently tax pensions or retirement funds such as 401(k) plans, but Cullerton told a City Club of Chicago luncheon that should take place as part of an overall look at what he said was Illinois' "outdated" tax system.

"It would just be a matter of fairness," said Cullerton, a Chicago Democrat.

Details are still being worked out, but Cullerton said the state could bring in could bring in upward of $1.6 billion a year. Cullerton said the money could be used to provide tax relief elsewhere, whether that be lowering the corporate income tax rate, reworking sales tax rates or some other idea. Cullerton also suggested a means-test to avoid taxing low-income seniors.

Democratic Gov. Pat Quinn today said he hadn’t seen details of Cullerton’s proposal, but indicated that it should be looked at as part of an effort to achieve tax “fairness.”

“I think it’s important that we always be open to reviewing the tax code,” Quinn said, restating his call for a commission to review the state’s tax laws with attention to fairness to “everyday taxpayers” and economic growth. “I think everything should be looked at. You know, how we go about it is obviously something we have to work together on.”

Imposing a tax on retirement incomes in Illinois could be a politically difficult prospect. Seniors make up a potent voting demographic in the state. Even the process to end free mass-transit rides for the elderly, a cost many seniors said they could afford, proved tough politically to get through the General Assembly.

Cullerton's idea comes after lawmakers and Quinn raised the state income tax rate from 3 percent to 5 percent in January.

Comments

Many retired people moved to Indiana in the recent years and they found out that their retirement income was taxed. The vast majority stayed in Indiana despite this and did not threaten a revolt (because it is logical that everyone should share the tax burden). So those of you who are complaining and saying you will move out of state, that is your priveleage to do so. But those saying there will be a revolt, I do not agree because logically everyone should have to pay their fair share. When you consider Indiana and the majority of other states tax retirement income and they do so because this income was never taxed in the first place (so no double taxation excuse in this situation). I also think they are going to exempt the first say $25,000 in retirement income so many retired people will not be affected (keep in mind social security will not be taxed at all). So only about 18% of the people with high pensions and who currently pay zero taxes would finally pay their fair share. Logiaclly, why should a struggling family pay 5% on their working income and retired peoeple with high pensions pay zero. Spread it out for everyone and then the tax rate might be lowered for everyone.

I don't have a problem with taxing gross retirement income in excess of a defined amount. If my income was close to say $75,000 I would be glad to "pay up". Fact is that it is not and that costs are going up to include proprety taxes, medical insurance (Medicare supplements and part D) fuel, general inflation and that SS has not provided an increase for the past two years. How can I afford to cut my fixed income by another 5%?

Go ahead tax my pension, i will move out of state . Then illinois won't get the tax paid on other income, that is a lot more than what they will get from taxing my pension . Ive been waiting for this and im ready to move my primary residance.

Hilarious, the dems will continue their parasite programs, as long as they can find some way to finance them.
I operated a business in Chicago, for 22 years.
Finally, I said enough.
My 128 jobs are now in one of the southern states, paying the same wages, my profit is up a 46%
I wish you weel Illinois citizens, the parisite aare not going to treat you well.

If this happens, my wife and I are leaving Illinois. Too cold here in the winter and the tax code was the ONLY benefit of staying here. Guess we'll just take our money and leave the state - HOW MUCH MONEY WILL THAT GENERATE FOR SPRINGFIELD? Politicians are just idiots when it come to economics and taxes.

Those who are hit with the tax think it is a dumb idea. Those who are not hit with the tax think it is a good idea. Instead of passing the 5% flat tax rate, there should have been a progressive income tax on all income, including retirement income and excluding just social security income. That would be fair to everyone. I don't understand the logic of Illinois not taxing retirement income in the first place. This income was never tax by the state in prior years so it is not double taxation.

GO AHEAD AND TAX SENIORS, THIS MOVE WILL MAKE LIBYA LOOK LIKE A BOYSCOUT CAMPFIRE.WE PAID OUR SHARE OF TAXES FOR 40+ YEARS. I GOT A BETTER IDEA, LETS REDUCE ALL POLITICIANS SALARY BY 50% THIS WOULD ADD 1.8 MILLION INTO THE GENERAL FUND.

I LIVED IN ILLINOIS FOR 10 YEARS, AND ALWAYS THOUGHT THE NON-TAXING OF PENSION BENEFITS WAS A CRIME. THE FAT-CAT POLS ARE GETTING $100,000 AND UP IN PENSIONS THAT SHOULD BE TAXED. YOU SHOULD HAVE A PROGRESSIVE INCOME TAX ON ALL PENSIONS EXCEPT SOCIAL SECURITY. FOR EXAMPLE: THE FIRST $20,000 COULD BE EXEMPT; THEN 2% TAX ON THE NEXT $20,000; 3% ON THE NEXT; THEN 4%, AND FINALLY 5% ON ALL AMOUNTS OVER $100,000.

ACTUALLY, THE CURRENT FLAT TAX ON AJI IS TERRIBLE; IT, TOO, SHOULD BE GRADUATED, WITH A MX TAX OF 6% ON LARGE INCOMES.

Public Pensions should ABSOLUTELY be taxed, especially for people who are retired in their 50's and early 60's contributing NOTHING to this state except for Property/Sales taxes.

Taxing 401(k) money will just push more and more retirees who can afford it to move to other states like Texas and Florida, where there is ZERO state income tax, saving those retirees 5% right off the top.

I know that when I retire, I'm not going to give Illinois 5% of my retirement income.

They should make the law that all and any retirement income earned in the state is taxable by the state. There by the politicians, police, fire, teachers and government workers who wish to move to another state, continue to pay tax to Illinois where they earned their retirement income.

I have no problem excluding the first 20-30,000 of income to live off of. After that tax away. If they are earning other income from employmement tax away at all and a hgher rate. This will stop the triple dippin.

Democrats don't know what fairness or the work ethic are. Retired people worked all of their lives and should be left alone. Our tax system should tax people that don't work and impose fines on criminals that commit non violent crimes rather than incarceration. Why don't we tax welfare, medicaid, housing assistance, free school lunches and unemployment benefits. Physically and mentally disabled non-illegal drug users could be an exception. I believe that unemployment should be longer than welfare and both should be limited to a maximum of 6 months. These lazy people would be forced to work or go without.

Given that Springfield has already worked out a plan to cut spending and balance the budget, this type of "tax fairness" is a fair idea. They have done that, haven't they? Because if they haven't then this type of proposal is absolute insanity. Why not just propose selling senior citizens for dog food?!?

Hmmmm.....so they are going to tax wealthy retirees who can move out of state at a moments notice.....brilliant! These Illinois pols are truly idiots. Is the concept of cutting spending really that dificult for them to understand?

So whats to stop the retired tax leaches from moving to Florida to avoid ILL taxes?
Cullerton is either stupid or believes his constituency is. He does not favor cutting back pensions and the hefty increases. Just wants to make it look like he did something.
ILL is screwed, nothing is funded. Not retirements, bonds, the education funds nothing. Any young people who think they can hold a job and stay in ILL are going to be either disappointed or very poor.

All 50 aldermen on the Chicago City Council had to file paperwork earlier this year detailing their outside income and gifts. The Tribune took that ethics paperwork and posted the information here for you to see. You can search by ward number or alderman's last name.

The Cook County Assessor's office has put together lists of projected median property tax bills for all suburban towns and city neighborhoods. We've posted them for you to get a look at who's paying more and who's paying less.

Past posts

Clout has a special meaning in Chicago, where it can be a noun, a verb or an adjective. This exercise of political influence in a uniquely Chicago style was chronicled in the Tribune cartoon "Clout Street" in the early 1980s. Clout Street, the blog, offers an inside look at the politics practiced from Chicago's City Hall to the Statehouse in Springfield, through the eyes of the Tribune's political and government reporters.